Kusserow on Compliance: CMS rule changes to audit and inspection authority

On February 12, 2015, CMS published a Final rule setting forth technical and policy changes to the Medicare Advantage (MA) (Part C) and Medicare Prescription Drug Benefit (Part D) programs. The Final rule makes various changes to the Proposed rule published last year (79 FR 1918, January 10, 2014). CMS originally proposed three changes to their audit and inspection authority governing Part C and Part D plans. The Final rule addresses only two of these. The rule requiring Part C and Part D plan sponsors to hire an independent auditor, every 3 years, to validate the correction of deficiencies found during a full or partial CMS program audit was dropped after public comment. Instead, the Final rule sets forth CMS’s authority or option to require organizations to hire an independent auditor, working in accordance with CMS specifications, to validate correction of deficiencies and report to CMS on audit findings. The second change in the Final rule relates to section 6408 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), which provides CMS authority to require each Part C and Part D contract to include the right to “timely” inspection and audit. The Final rule inserts the word “timely” to 42 C.F.R. section 422.503(d)(2) and section 423.504(d)(2) in accordance with the ACA.

Business Continuity

The original Proposed rule required all MA organizations and Part D sponsors to limit the impact of unavoidable disruptions to beneficiaries and to establish a plan to ensure rapid restoration of operations. It also required the addition of contract provisions requiring these organizations to develop and maintain business continuity plans and to implement policies and procedures to reduce interference with business operations based on anticipated disruptions. The Final rule makes various changes to the Proposed rule including the relaxation of the restoration time period after systems failure from 24 hours to 72 hours. Furthermore, CMS revised the text to clarify that CMS requires MA organizations and Part D sponsors to “plan to” restore essential functions within the new 72-hour timeframe rather than guarantee complete restoration within that time.

In anticipation of the January 1, 2016, application date for the Final rule, MA organizations and Part D sponsors should begin to formulate a contingency plan and appropriate policies and procedures in response to systems failure risks. The Compliance Resource Center has various contingency policies that are customizable to meet business continuity plan needs.

Richard P. Kusserow served as DHHS Inspector General for 11 years. He currently is CEO of Strategic Management Services, LLC (SM), a firm that has assisted more than 3,000 organizations and entities with compliance related matters. The SM sister company, CRC, provides a wide range of compliance tools including sanction-screening.

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Copyright © 2015 Strategic Management Services, LLC. Published with permission.